Close on the heels of the addition of a new partner to its investment team, New York-based Wellspring Capital Management in May acquired Canada’s Protectron Inc., a security alarm monitoring business, for $61.5 million.
In addition to Wellspring’s equity piece, management gave just more than $6 million for a 10% stake in the Montreal-based company. Heller Financial and Bank Paribas provided debt financing.
Quebecor Media sold Protectron, with approximately 110,000 subscribers and C$40 million in revenue, to Wellspring. Protectron is the third largest security alarm company in Canada and the largest in Quebec.
These aspects attracted Wellspring to the company, said Greg S. Feldman, managing partner of the firm.
“Additionally, the market is a lot less competitive in Canada than in the United States,” Feldman added.
Wellspring plans to use Protectron as a platform to acquire similar North American alarm companies.
The deal does not represent Wellspring’s first in Canada. The firm also owns The Hockey Co., a Montreal-based maker of hockey equipment.
Also in May, Wellspring added a new partner to its ranks when it hired William Dawson away from Whitney & Co. where he was employed for less than a year.
As previously reported in Buyouts, Whitney closed its fifth private equity fund at $1.1 billion – $900 million under target – and promised to focus most of its efforts on the U.S., thereby cutting some of its European staff (Buyouts May 21, p. 1).
However, Dawson said his decision to switch firms had less to do with Whitney and more to do with Wellspring.
“It was really the opportunity to join a much smaller place at a very senior level that got me,” Dawson said.
Even though Dawson did not accept the job at Wellspring until this spring, it was not the first time the position had been offered to him. He and Feldman have actually known each other for several years and discussed Dawson joining the team while he was still a managing director at DLJ Merchant Banking Partners, before he went to Whitney. He worked at DLJ for fourteen years.
“At that time, to go from a very large firm to a very small firm . . . I just couldn’t get my arms around that at the time,” Dawson said.
Dawson considers himself a value investor and said his philosophy on deals – value-oriented basic company investing – is analogous to Feldman’s and Wellspring’s in general. He prefers to work at smaller places, he said, which explains why he left DLJ in 2000 and Whitney this year.
Feldman said he expects Dawson to add a new perspective to Wellspring, which is something he was looking for in a partner.
“He has a long and good track record. He’s a terrific guy. What more can you ask for?” Feldman said.
Coming with Dawson from his position as a senior associate at Whitney is Alexander Cross. As Dawson’s right-hand-man, Cross was considered a package deal with Dawson, said both Dawson and Feldman.
“They work as a team and will continue to do so at Wellspring,” Feldman said.